IDC: Worsening European Economy Could Drive Down IT Market

IDC is warning that further economic troubles in Europe could drive down global IT spending by as much as $150 billion below the analyst firm's previous estimates for the period from 2001 through 2003.

IDC released a bulletin this week, "Europe Feels the Squeeze: How Bad Will it Get?", based on new economic data pointing to a more severe downturn in Western Europe.

IDC previously expected that a slight slowdown in European economic growth would not have a significant impact on IT spending. Now, IDC notes that hardware sales have "tempered," especially for networking equipment and PCs.

IDC originally projected double-digit growth in IT spending. The company is still betting in the lower end of that range: 11 percent. But the company is also allowing for a "worst case" of 7.9 percent growth in IT spending in 2001, with the slowdown continuing into 2002 and 2003. That scenario would include $50 billion less demand from Europe.

Germany and Italy are among the countries at highest risk. IDC expects the United Kingdom to be more stable.

"Software and services are still expected to show strong growth this year," said Stephen Minton, manager of IDC's Global IT Economic Outlook research program. "Similar to the story in North America, we expect that any economic slowdown would have its most severe impact on hardware demand."